Latin America-focused Nexa Resources (NYSE: NEXA) has sold its Pukaqaqa copper project in Peru to Canada’s Olympic Precious Metals for an initial $4.3 million, which could potentially reach $29.3 million if certain milestones are met.
The company, which operates the largest underground zinc mine in Peru, Cerro Lindo, said Olympic Precious Metals will make an upfront payment of $300,000.
The remaining balance will be structured as $1 million in the first phase and $3 million in the second. An additional $25 million is contingent on the achievement of defined milestones.
The miner, controlled by the Votorantim group, said the transaction is expected to close by the end of 2024.
Pukaqaqa, valued at nearly $655 million, is a Greenfield copper-gold deposit expected to be mined through a conventional open pit and produce copper and molybdenum concentrates.
The project is located in the central highlands of Peru at an altitude of over 4,000 metres and it is among Nexa Resources’ several projects without a date set for starting construction.
According to company’s estimates, the asset has 83 million tonnes of measured and indicated resources and 74 million tonnes of inferred resources, or 157 million tonnes of resources in total.
Nexa Resources’ decision to sell the project was announced in July and it comes as part of a broader strategy to optimize its portfolio and focus on its core assets, it said.
“The sale of Pukaqaqa is another step in our journey to continually maximize value for the company and its shareholders. Portfolio optimization is a central part of our strategy to improve cash flow generation and returns,” Nexa Resources chief executive Ignacio Rosado said in a statement.
The zinc producer estimated in 2018 that Pukaqaqa would begin operations in 2023, but local opposition delayed a construction decision.
Pukaqaqa is not the only project Nexa has in Peru. Its local portfolio includes 10 exploration projects totalling almost $60 million. The company recently applied for an exploration permit application in the country’s Cajamarca region.
Nexa Resources owns and operates five underground mines — three located in the Central Andes of Peru and two located in the Brazilian state of Minas Gerais. It also has three smelters, two in Brazil and one in Cajamarquilla, east of Lima, which is considered the largest smelter in the Americas and among the world’s top five.
Peru is the world’s second largest copper producer after Chile and an important producer of zinc.
Vancouver-based Olympic Precious Metals focuses on developing copper and gold opportunities across the Americas.
